Since the election, mortgage rates have seen more highs than lows. Most experts are predicting that mortgage rates will continue to rise in 2017.
Even so, there are many homeowners looking to take advantage of today’s still-low rates by refinancing.
Mortgage rates are still in the 4’s, so many fence-sitters are revisiting the question of whether or not to refinance.
There are many reasons a refinance can be beneficial. Some reasons homeowners choose to refinance include:
- Lowering your interest rate
- Shortening your mortgage term
- Dropping mortgage insurance
- Getting cash out for home improvements, debt consolidation, or vacation
- Lowering your payment
Refinancing could be the best idea for some, but that doesn’t mean it is ideal for everyone.
For example, closing costs will almost always play a part in the decision of whether to refinance. These can increase the cost of refinancing by enough to make it a poor decision.
But what about homeowners with more than one home to refinance? Can you refinance two or more properties at the same time?
How Many Properties Can You Own?
While there is no limit to the number of homes you can own, there is a limit to the number of mortgages one person can have.
Investors used to be limited to just four properties. This included their primary residence.
Today, however, it is possible to finance up to 10 properties.
It should be noted that investors may find it difficult to find a lender who will finance this many properties. The reason it’s difficult is because it can be challenging for lenders to underwrite larger quantities of properties.
Going through that much documentation can be extremely time-consuming. It can also mean the likelihood of mistakes being made, so most lenders prefer to stay within the wheelhouse of four properties.
Refinancing Two or More Homes at Once
Fortunately, if you can keep your total number of mortgages to fewer than five, most lenders won’t have a problem with you refinancing two or more homes at once.
There are some caveats to this, however.
Underwriters will be looking at your entire portfolio of mortgages and finances when they are underwriting your loan. For this reason, it’s usually a good idea to stay with the same lender when refinancing multiple properties at once.
If you use different lenders at the same time, all the calculations for your debt ratios could be different by the time you close.
Debt ratios can change based on final rate locks. This will affect cash flow, and it could ultimately change your approval terms.
Other Considerations When Refinancing More Than One Home
There are a number of factors to consider when refinancing multiple properties.
For example, it may be better to pay down one loan more than the other in order to get the best rate and/or terms. This could be accomplished by doing a cash-out refinance on one property to pay down another.
This can also be done by taking out a home equity loan to pay down another mortgage loan.
Also consider that you will typically need a higher credit score than if you were financing just one home. You will also generally need more equity when financing more than one property.
As an example, you can do a conventional “rate and term” refinance on your primary residence at a loan-to-value (LTV) of up to 95 percent.
The maximum LTV for an investment property is limited to just 75 percent.
If you are refinancing an FHA or a VA loan, you will only be able to do so if the property is your primary residence.
Is Refinancing Right For You?
There are many factors to consider before deciding if refinancing is right for you, and even more if you are refinancing two homes at the same time.
You should always weigh the pros and cons of your situation and act per your own best interest.
Above all else, be forward with your lender about your intentions, especially when refinancing multiple properties at once.
Your lender can tell you if it is better to refinance the homes separately, or if it’s better to refinance them at the same time. They can also give you advice as to whether you should pay down one property to get better terms on the other one.